Provisional attachment under PMLA fails without material showing real risk of concealment or transfer of property.
The applicable PMLA schedule is assessed by the date of the alleged money-laundering conduct, not the date of the original predicate offence, so the challenge based on retrospective application failed. Prima facie material showing disproportionate assets was sufficient to support attachment, without any final finding on the merits. Provisional attachment under Section 5(1) requires recorded reasons supported by material showing proceeds of crime and a real likelihood of concealment, transfer or other dealing to frustrate confiscation; where the property had already been attached by the Special Court, those preconditions were not met, and the attachment orders were set aside.
Issues: (i) Whether the insertion of offences under the Prevention of Corruption Act, 1988 in the schedule to the Prevention of Money-laundering Act, 2002 could be applied to the facts of the case despite the check period predating the amendments. (ii) Whether the record disclosed a prima facie case of disproportionate assets so as to sustain the attachment proceedings. (iii) Whether the requirements of Section 5(1) of the Prevention of Money-laundering Act, 2002 were satisfied for provisional attachment when the property had already been attached by the Special Court.
Issue (i): Whether the insertion of offences under the Prevention of Corruption Act, 1988 in the schedule to the Prevention of Money-laundering Act, 2002 could be applied to the facts of the case despite the check period predating the amendments.
Analysis: The relevant date for determining the applicability of the scheduled offence is the date when the person projects tainted property as untainted or otherwise engages in money-laundering, not the date of the original predicate offence. The FIR and ECIR were much later than the amendments that brought the offence within the schedule, and the amendment was not being applied retrospectively on the facts found.
Conclusion: The challenge on the ground of retrospective application failed.
Issue (ii): Whether the record disclosed a prima facie case of disproportionate assets so as to sustain the attachment proceedings.
Analysis: The material on record prima facie indicated possession of property disproportionate to known sources of income. The Tribunal declined to record any final finding on the merits because that would be determined by the Special Court in the criminal trial.
Conclusion: The objection to the attachment on this factual ground was rejected.
Issue (iii): Whether the requirements of Section 5(1) of the Prevention of Money-laundering Act, 2002 were satisfied for provisional attachment when the property had already been attached by the Special Court.
Analysis: Provisional attachment under Section 5(1) requires recorded reasons based on material showing possession of proceeds of crime and a likelihood that the property may be concealed, transferred or dealt with so as to frustrate confiscation. As the property was already attached by the Special Court, the material necessary to show such likelihood was missing, and the reasons to believe were recorded without application of mind.
Conclusion: The provisional attachment order, and the order confirming it, could not be sustained and were set aside.
Final Conclusion: The appeal succeeded on the absence of the statutory preconditions for provisional attachment, and the impugned attachment orders were annulled, leaving the authority free to act again in accordance with law if the factual basis later so permits.
Ratio Decidendi: Provisional attachment under Section 5(1) of the Prevention of Money-laundering Act, 2002 can be sustained only when the authority records reasons based on material showing a real likelihood that the property may be concealed, transferred or otherwise dealt with so as to frustrate confiscation.
TaxTMI 
AI Drafter ✕
TaxTMI 
